The real cost of Osborne’s Budget

Labour Party

David Cameron is today spending huge amounts of taxpayers’ money holding a Cabinet meeting in Yorkshire.  When Gordon Brown took his Cabinet to Leeds at the end of 2008, West Yorkshire Police spent £138,000 on extra security.  Add travel, hotels, and the other necessary costs and we have a very substantial sum.

This may be just acceptable if the Osborne budget had not happened.  But it did and we will soon be feeling the consequences.

Last week the Chancellor announced £30 billion pounds of welfare spending cuts.  Households with a joint income of £30,000 will lose tax credits. Disability and housing allowances will face swingeing cuts.  Meanwhile the ring-fencing of health and international aid and the Chancellor’s promise to protect education and defence spending will mean a cut of around £43 million from the remaining £125 billion of departmental spending – a 34 per cent cut in real terms.

The real effect of these overwhelming numbers was brought home to me yesterday listening to a representative from the UK Film Council talk about what they are expected to do.  The UK Film Council, which receives £30 million a year from the Treasury as well as other funding and employs about 100 staff, does a huge amount of work stimulating the film industry in this country thereby not only improving our quality of life but creating jobs.

The UK Film Council along with the rest of government has been asked to produce spending plans showing cuts of up to 30 per cent for the forthcoming Comprehensive Spending Review.  A cut of 30 per cent in an organisation employing 100 people is obviously devastating.  I would go so far as to say it would completely undermine its viability.

This takes me back to the very bad old days, the 1980s under Margaret Thatcher.  My first general election in London was in 1979, the year Thatcher won.  I have never doubted that the Iron Lady had a very clear agenda which fell into two parts.  One was to break the power of organised labour by increasing unemployment.  The other was more subtle in its incarnation if not its philosophy: to maintain, and even increase, the power of a ruling, right-wing elite.

Thatcher was remarkably successful in achieving her ends.  The trade unions have never been the same again.  What is more, Britain’s governing class have now reverted to type – over half of the current Con/Lib-Dem Cabinet are public school educated.

Thatcher managed her revolution on the back of the money from North Sea oil which provided just about enough revenue to fund the enormous cost of unemployment benefit caused by her policies.  Much of the real damage to government was therefore hidden by this criminal waste of money, money which could have been used for the things Osborne claims he wants to maintain – health, international aid and education.

The essential point is, however, that Thatcher could afford the cost of her vicious right-wing policies because she had the means to do so.  Cameron does not.

Make no mistake, the Cameron/Osborne cuts are as ideological as any made by Margaret Thatcher.  While there is a need, endorsed by the G20, to get public expenditure under control, Osborne’s enthusiastic embracing of public sector cuts was not necessary.  The Government could, and should, have waited.  It did not all have to be done at once, and the immediate cuts could have been made in areas such as big government IT projects unlikely to hit either welfare benefits or middle income families.

It is, of course, the scale of the cuts and where they fall that demonstrates their ideological nature.    

There is no doubt unemployment will go up, a human tragedy in itself.

What is more, the cuts will put an end to policies which may have helped.  On the Today programme this morning two economics professors, Dr Mariana Mazzuccto and Dr Linda Yeuh of the Open University and Oxford University respectively, discussed the need for the UK to improve its export performance.  There both agreed this meant more academic research and innovation – an distant prospect indeed since it’s extremely unlikely that even the protected education budget will be increased to make this happen.